Discussion:Entity Classification Election/ fiscal year
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Discussion Forum Index --> Advanced Tax Questions --> Entity Classification Election/ fiscal year
Discussion Forum Index --> Tax Questions --> Entity Classification Election/ fiscal year
| 2 September 2008 | |
| Facts - Entity operated as a single member LLC July 07 thru March 08. (Filed Sch. C for 07 operations). Added a member in March 08.. intend to file 1065 for portion of 08 (6 + months) using original LLC EIN/name. Considering a C corporation in September 08 with Aug 31 fiscal year.. primarily to allocate substantial Dec 08 income, via wage, between 08 and 09. Client would prefer to avoid incurring legal fees to incorporate if possible.
Q1 - 8832 not filed in March 08 when 2nd member added. Is client precluded from an Entity Classification Election (from LLC to C Corp)under the 1 entity change in 60 months rule? Q2 If Entity Classification Election is allowed, is the entity allowed to elect a Sept to Aug fiscal year for the C Corp reporting? Q3 If Q1 answer is yes or Q2 answer is no, Anything to prevent busienss from forming a new corporation and electing a fiscal year? | |
ReadMyLips (talk|edits) said: | 3 September 2008 |
| In looking at the instructions to the 8832, the classification change would be automatic to a partnership when the second member was added (see "Default Rules"). I don't think this is considered an entity classification election, so you haven't violated the 60-month rule. If you make a valid election, then the entity would be treated as a c-corporation for tax purposes and all of the rules regarding accounting methods, tax year, etc. would apply--so I believe they would be able to elect a fiscal year. | |
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